As you compare Chapter 7 and Chapter 13 bankruptcy, you want to make the right choice for your unique financial situation. While there are benefits to both, most people find that the advantages of Chapter 7 bankruptcy have them strongly considering this option.
Here are four advantages of Chapter 7 bankruptcy:
- A truly fresh start. Once you complete the Chapter 7 bankruptcy process, you're able to start fresh. While you may not be able to discharge all your debt, you'll rid yourself of a major portion of it.
- It's faster. The discharge of debts through Chapter 7 bankruptcy typically occurs within two to three months. This is in comparison to Chapter 13 bankruptcy in which a repayment plan lasts three or five years.
- Keep your future income. Since there is no repayment plan, you're not required to make a monthly payment in the future. This allows you to keep all the income you earn, thus re-establishing your finances.
- No limitation on how much debt you can have. Unlike Chapter 13, there is no limit on the amount of debt you can have. This makes it much easier to proceed, as long as you pass the means test.
With these advantages in mind, you may realize that filing for Chapter 7 bankruptcy is the best way to forget about the past position yourself for future financial success.
If you're ready to file for bankruptcy, list the pros and cons as they pertain to your situation. From there, determine if Chapter 7 bankruptcy is truly the best way to improve your financial situation.